Liquidator cannot be forced to participate in arbitration proceedings during the liquidation proceedings – Reliance India Power Fund, Reliance Capital Trustee Company Limited Vs. Mr. Raj Kumar Ralhan Liquidator of Su Kam Power Systems Limited – NCLAT New Delhi
February 24, 2020
The appellant had initiated arbitration proceedings against the CD, of which the respondent is the liquidator, before initiation of CIRP. The respondent did not attend the arbitration proceedings. The appellant submitted that in terms of section 35(1)(k), it is the duty of the liquidator to defend any suit, prosecution or other legal proceedings to which the CD is a party. The Respondent submitted that the arbitration proceeding relates to inter-shareholders dispute of the CD and the CD has nothing to do with such inter se dispute. While agreeing with the submission of the appellant, the NCLAT held that the said duty includes any conscious decision that a liquidator may take whether, in the given set of facts, he needs to defend any proceedings. The appellant has no right to force the liquidator to take part in the arbitration proceedings, as such duty would include a conscious decision to not to take part in the proceedings.